JSE-listed Telkom has reported a decline in earnings during the first quarter of the year, impacted by topline performance and an increase in its cost base.

During the three months to June 30, Telkom’s group earnings before interest, taxes, depreciation and amortisation (Ebitda) declined 15.2% year-on-year to R2.33-billion, with Ebitda margin contracting 3.2 percentage points to 22.7%.

Group revenue decreased 3.2% year-on-year to R10.28-billion, impacted by accelerated migration from legacy, a tough operating environment and an intensely competitive landscape, says Telkom Group CEO Serame Taukobong.

“Telkom published its trading update for the first quarter of the year, demonstrating a challenging performance due to accelerated legacy migration, intense competitive landscape and consumers being under significant pressure due to rising fuel prices, interest rates and the high unemployment rate,” he explains.

“We accelerated migration from legacy to next generation technologies, following a slowdown over the past two years as we catered for customer demands in the intense Covid-19 environment.”

This resulted in fixed legacy voice revenue declining by 19.9% year-on-year, mainly seen across the enterprise and small to medium business segment, partially offset by an increase in external revenue of BCX IT business and Openserve by 4.8% and 8.4% respectively.

“The BCX IT business grew after a challenging period owing to the easing of global supply chain constraints together with an increase in deal pipeline and win ratio, which signals a positive outlook for the year ahead,” says Taukobong.

Despite the challenging financial performance, Telkom achieved stable growth in its active subscriber base, with active mobile subscribers increasing 7.8% year-on-year to 17.3-million with a blended average revenue per user (ARPU) of R88.53.

The group’s post-paid subscribers grew 8% to 2.8-million at an ARPU of R208.50, while pre-paid subscribers expanded 7.7% to 14.5-million at an ARPU of R64.77.

Telkom also reported a strong 12.4% growth in mobile data traffic to 263 petabytes, supported by a 2% growth in broadband subscribers to 10.7-million on a year-on-year basis

“The continued growth trajectory in the fibre market was sustained in the period under review with the fibre-to-the-home (FTTH) connectivity rate of 46.6% remaining the highest in the market,” he adds, noting that the number of homes passed with fibre grew 45.3% to more than 890 000 and he number of homes connected with fibre grew by 35.2% to 414 847.

Total fixed traffic increased by 18.9% to 452 petabytes.

Meanwhile, Swiftnet continues to commercialise the Masts and Tower portfolio, with the productive portfolio up 2.7% to 3 935 towers year-on-year.